GAO-01-1035 Financial Audit: Independent and Special ...responsible for establishing, maintaining, and assessing internal control to provide reasonable assurance that the following

GAOUnited States General Accounting Office

Report to Congressional Committees

September 2001 FINANCIAL AUDIT

Independent and Special Counsel Expenditures for the Six Months Ended March 31, 2001

a
GAO-01-1035

Page i GAO-01-1035 Independent and Special Counsels

Contents

Transmittal Letter 1

Auditor’s Report 3Background 3Opinion on Statements of Expenditures 5Consideration of Internal Control 5Compliance With Laws and Regulations 5Objectives, Scope, and Methodology 6Agency Comments and Our Evaluation 7

AppendixesAppendix I: Statement of Expenditures for Independent Counsel

Barrett 10

Appendix II: Statement of Expenditures for Independent Counsel

Bruce 13

Appendix III: Statement of Expenditures for Independent Counsel

Lancaster 16

Appendix IV: Statement of Expenditures for Independent Counsel

Pearson 19

Appendix V: Statement of Expenditures for Independent Counsel Ray 22

Appendix VI: Statement of Expenditures for Independent Counsel

Smaltz 26

Appendix VII: Statement of Expenditures for Special Counsel Danforth 29

Abbreviations

AOUSC Administrative Office of the U.S. CourtsFBI Federal Bureau of InvestigationOIC Office of Independent CounselOSC Office of Special Counsel

United States General Accounting Office

Washington, D.C. 20548

A

September 28, 2001 Transmittal Letter

Congressional Committees

Enclosed is our report on the statements of expenditures of six offices of independent counsel and one office of special counsel for the 6 months ended March 31, 2001. We are sending copies of this report to the Attorney General, the Director of the Administrative Office of the U.S. Courts, the independent counsels and special counsel included in our audit, and other interested parties. Copies will be made available to others upon request.

This report was prepared under the direction of Jeanette M. Franzel, Acting Director, Financial Management and Assurance, who can be reached at (202) 512-9406. If I can be of further assistance, please call me at (202) 512-2600.

Jeffrey C. SteinhoffManaging DirectorFinancial Management and Assurance

Page 1 GAO-01-1035 Independent and Special Counsels


United States General Accounting Office


A

Congressional Committees Auditor’s Report

This report presents the results of our audits of expenditures1 reported by six offices of independent counsel and one office of special counsel for the 6 months ended March 31, 2001. The Department of Justice and the independent counsels are required under 28 U.S.C. 594 (d)(2), (h) and 596 (c)(1) (1994) to report on expenditures from a permanent, indefinite appropriation established within the Department of Justice to fund independent counsel activities. We are required under 28 U.S.C. 596 (c)(2) to audit the statements of expenditures prepared by the independent counsels. We also audited the statement of expenditures of Special Counsel John C. Danforth, who is authorized by the Department of Justice to fund his operations from the permanent, indefinite appropriation.

In our audits covering the 6 months ended March 31, 2001, we found

• the statements of expenditures presented in appendixes I through VII, for the offices of independent counsel David M. Barrett, Carol Elder Bruce, Ralph I. Lancaster, Daniel S. Pearson, Robert W. Ray, and Donald C. Smaltz, and special counsel John C. Danforth, respectively, are presented fairly in conformity with the basis of accounting described in note 1 of each counsel’s statement, which is principally the cash basis, a comprehensive basis of accounting other than U.S. generally accepted accounting principles;

• no material weaknesses in internal control over financial reporting (including safeguarding assets) and compliance with laws and regulations; and

• no reportable noncompliance with laws and regulations we tested.

The following sections provide background information, outline each conclusion in more detail, and discuss the scope of our audits.

Background The Ethics in Government Act of 1978 amended title 28 of the United States Code to authorize the judicial appointment of independent counsels when the Attorney General determines that reasonable grounds exist to warrant further investigation of high-ranking government officials for certain alleged crimes. The independent counsel law (28 U.S.C. 591-599 (1994))

1The term expenditures as used in this report generally means cash disbursed.

Page 3 GAO-01-1035 Independent and Special CounselsPage 3 GAO-01-1035 Independent and Special Counsels

was intended to preserve and promote the accountability and integrity of public officials and of the institutions of the federal government. The independent counsel law expired on June 30, 1999. Provisions of the law allow the independent counsels serving at the expiration date to continue investigating pending matters until they determine that the investigations of such matters have been completed. Also, the Department of Justice determined that the appropriation established by Public Law 100-202 to fund expenditures by independent counsels appointed pursuant to 28 U.S.C. 591-599, or other law, is available to fund the expenditures of John C. Danforth, who was appointed as a Special Counsel within the Department of Justice by the Attorney General.

The independent counsel law directs the Department of Justice to pay all costs relating to the establishment and operation of independent counsel offices from the permanent, indefinite appropriation established to fund independent counsel activities. The independent counsel law also designates specific responsibilities to the Administrative Office of the U.S. Courts (AOUSC) for independent counsels’ administrative support. The Department of Justice periodically disburses lump-sum payments to AOUSC for this purpose.

During any 6-month period, there may be other significant costs incurred in support of the work of the counsels, which are paid from appropriations other than the permanent, indefinite appropriation established to fund independent counsel activities. These costs arise when a counsel uses detailees from other federal agencies, such as the Federal Bureau of Investigation (FBI). Independent counsels are not required to reflect such costs in their statements of expenditures and neither the independent counsels nor special counsel do so. However, to the extent practicable, the counsels identified and disclosed these costs in the notes to their statements presented in the appendixes to this report.

These statements and related notes do not include certain expenditures related to the investigation by independent counsel Arlin M. Adams/Larry D. Thompson’s office, which was officially terminated by the Court effective June 3, 1999, and, accordingly, no longer prepares financial statements. However, $10,484 in expenditures occurred during this period to fulfill all financial obligations, recycle furniture, and prepare administrative files for transfer to the archives.


Opinion on Statements of Expenditures

The statements of expenditures including the accompanying notes for the offices of independent counsel David M. Barrett, Carol Elder Bruce, Ralph I. Lancaster, Daniel S. Pearson, Robert W. Ray, and Donald C. Smaltz, and for the office of special counsel John C. Danforth, present fairly, in all material respects, the expenditures of these counsels for the 6 months ended March 31, 2001, on the basis of accounting described in note 1 to each office’s statement.

The counsels prepared their statements of expenditures principally on a cash basis of accounting, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. The bases of accounting are described in note 1 of each counsel’s statement.

Consideration of Internal Control

In planning and performing our audits, we considered internal control over financial reporting and compliance.2 We did this to determine our procedures for auditing the statements of expenditures, not to express an opinion on internal control. Accordingly, we do not express an opinion on internal control over financial reporting and compliance. However, for the controls we tested, we found no material weaknesses in internal control over financial reporting (including safeguarding assets) and compliance for the 6-month period ended March 31, 2001. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors, fraud, or noncompliance in amounts that would be material to the statements of expenditures may occur and not be detected promptly by employees in the normal course of performing their duties. Our internal control work would not necessarily disclose all material weaknesses.

Compliance With Laws and Regulations

Our tests for compliance with selected provisions of laws and regulations disclosed no instances of noncompliance that would be reportable under U.S. generally accepted government auditing standards. However, the objective of our audit was not to provide an opinion on overall compliance with laws and regulations. Accordingly, we do not express such an opinion.

2The objectives of internal control are to provide reasonable assurance that management objectives regarding financial reporting (including safeguarding assets) and compliance with laws and regulations are achieved.


Objectives, Scope, and Methodology

The independent counsels are responsible for preparing statements of expenditures in conformity with the bases of accounting described in the accompanying notes. Though not required to do so, the special counsel also elected to prepare a statement of expenditures. The counsels are also responsible for establishing, maintaining, and assessing internal control to provide reasonable assurance that the following internal control objectives are met and for complying with applicable laws and regulations.

• Financial reporting: Transactions are properly recorded, processed, and summarized to permit the preparation of the statements of expenditures in conformity with the basis of accounting described in the notes to their statements, and assets are safeguarded against loss from unauthorized acquisition, use, or disposition.

• Compliance with laws and regulations: Transactions are executed in accordance with laws and regulations that could have a direct and material effect on the counsels’ statements of expenditures.

We are responsible for (1) obtaining reasonable assurance about whether the counsels’ statements of expenditures are presented fairly, in all material respects, in conformity with the basis of accounting described in the notes accompanying their statements of expenditures, (2) obtaining a sufficient understanding of internal control over financial reporting and compliance to plan the audits, and (3) testing compliance with selected provisions of laws and regulations that have a direct and material effect on the statements.

In order to fulfill these responsibilities, for each counsel, we (1) examined, on a test basis, evidence supporting the amounts and disclosures in the statement of expenditures, except for items indicated as unaudited, (2) assessed the accounting principles used by management, (3) evaluated the overall presentation of the statement of expenditures, (4) obtained an understanding of internal control related to financial reporting (including safeguarding assets) and compliance with laws and regulations, and (5) tested compliance with selected provisions of 28 U.S.C. 591-599 (1994), 5 U.S.C. Chapter 55, and regulations relating to pay administration.

We limited our internal control testing to controls over financial reporting and compliance. Because of inherent limitations in internal control, misstatements due to error, fraud, losses, or noncompliance may nevertheless occur and not be detected. We also caution that projecting our evaluation to future periods is subject to the risk that controls may become


inadequate because of changes in conditions or that the degree of compliance with controls may deteriorate. In addition, we caution that our internal control testing may not be sufficient for other purposes.

We did not test compliance with all laws and regulations applicable to the offices of independent and special counsel. We limited our tests of compliance to those laws and regulations that we deemed applicable to the statements of expenditures. We caution that noncompliance may occur and not be detected by these tests and that such testing may not be sufficient for other purposes.

We obtained, but did not audit, information on costs that were paid from sources other than the permanent, indefinite appropriation, as well as information on receipts. We obtained information on these costs and receipts from the independent and special counsel offices; the Department of Justice, including the FBI; the Department of the Treasury; and the U.S. Postal Service.

We performed our audits in accordance with U.S. generally accepted government auditing standards.

Agency Comments and Our Evaluation

We provided drafts of this report to the six offices of independent counsel, the office of the special counsel, the Department of Justice, and AOUSC for review and comment. Agency officials agreed with the facts and conclusions in our report.

Jeffrey C. SteinhoffManaging DirectorFinancial Management and Assurance

September 7, 2001


List of Committees

The Honorable Robert C. ByrdChairmanThe Honorable Ted StevensRanking Minority MemberCommittee on AppropriationsUnited States Senate

The Honorable Joseph I. LiebermanChairmanThe Honorable Fred ThompsonRanking Minority MemberCommittee on Governmental AffairsUnited States Senate

The Honorable Patrick J. LeahyChairmanThe Honorable Orrin G. HatchRanking Minority MemberCommittee on the JudiciaryUnited States Senate

The Honorable C. W. Bill Young ChairmanThe Honorable David R. ObeyRanking Minority MemberCommittee on AppropriationsHouse of Representatives

The Honorable Dan BurtonChairmanThe Honorable Henry A. WaxmanRanking Minority MemberCommittee on Government ReformHouse of Representatives


The Honorable James F. SensenbrennerChairmanThe Honorable John Conyers, Jr.Ranking Minority MemberCommittee on the Judiciary House of Representatives


Appendix I

AppendixesStatement of Expenditures for Independent Counsel Barrett Appendix I

DAVID M. BARRETT

Office of Independent Counsel

Statement of Expenditures(Cash basis)

Six Months Ended March 31, 2001

Personnel compensation and benefits

Travel (note 2)

Rent, communications, and utilities (note 3)

Contractual services (note 4)

Acquisition of capital assets

Supplies and materials

Administrative services (note 5)

Total expenditures

$559,779

35,113

206,988

147,641

4,568

4,212

__78,749

$1,037,050

____________________________________________________The accompanying notes are an integral part of this statement.


Appendix I

Statement of Expenditures for Independent

Counsel Barrett

DAVID M. BARRETT


Notes to Statement of Expenditures

Note 1 - Accounting policies

Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Independent Counsel-David M. Barrett (OIC-Barrett) for the 6 months ended March 31, 2001. The statement of expendituresincludes only expenditures made from the permanent, indefinite appropriation forthe office of independent counsel that are processed through the AdministrativeOffice of the U.S. Courts (AOUSC) and the OIC. Mr. Barrett was appointed onMay 24, 1995, to investigate certain allegations against the Secretary of Housingand Urban Development.

Basis of accounting: The accompanying statement of expenditures wasprepared principally on the cash basis of accounting, which is a comprehensivebasis of accounting other than U.S. generally accepted accounting principles.Under this method, except for personnel compensation and benefits,expenditures are recorded when the funds are disbursed by AOUSC or, fornoncash transfers, when charged by AOUSC. Most personnel compensationand benefits are recorded at the end of the pay period when earned.

Note 2 - Travel

Travel generally includes expenditures for investigation-related travel paid forOIC-Barrett personnel and witnesses.

Note 3 - Rent, communications, and utilities

Approximately $161,000 in office rent is included in rent, communications, andutilities.

Note 4 - Contractual services

Contractual services primarily consist of expenditures for investigators, courtreporters, and services of other experts in areas of interest to the investigation.


Appendix I


Counsel Barrett

Note 5 - Administrative services

AOUSC receives an administrative fee equal to 3 percent of OIC expendituresfor performing disbursement and accounting functions for OIC-Barrett. Paymentof these fees generally occurs in the month following the services. Also includedin administrative services are other costs, amounting to $52,180, incurred byAOUSC in providing administrative guidance and support to independentcounsel offices. These costs were certified by AOUSC, paid from theindependent counsel appropriation, and allocated to the OIC.


Appendix II

Statement of Expenditures for Independent Counsel Bruce Appendix II

CAROL ELDER BRUCE





Travel (note 2)






Total expenditures

$92,133

(339)

60,237

17,009

3,724

676

_17,865

$191,305



Appendix II


Counsel Bruce

CAROL ELDER BRUCE




Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Independent Counsel-Carol Elder Bruce (OIC-Bruce) for the 6 months ended March 31, 2001. The statement of expendituresincludes only expenditures made from the permanent, indefinite appropriation forthe office of independent counsel that are processed through the AdministrativeOffice of the U.S. Courts (AOUSC) and the OIC. Ms. Bruce was appointed onMarch 19, 1998, to investigate whether the Secretary of the Interior may haveviolated federal criminal law in sworn testimony before a congressionalcommittee. Ms. Bruce submitted her final report to the Special Division of theU.S. Court of Appeals for the District of Columbia Circuit on December 30, 1999.Ms. Bruce received the order to terminate her office from the U.S. Court ofAppeals for the District of Columbia Circuit effective March 22, 2001.


Note 2 - Travel

This balance consists of a refund for unused metro fare cards.




Contractual services primarily consist of payments to experts in preparingindependent counsel records for archiving.


Appendix II


Counsel Bruce


AOUSC receives an administrative fee equal to 3 percent of OIC expendituresfor performing disbursement and accounting functions for OIC-Bruce. Paymentof these fees generally occurs in the month following the services. Also includedin administrative services are other costs, amounting to $12,641, incurred byAOUSC in providing administrative guidance and support to independentcounsel offices. These costs were certified by AOUSC, paid from theindependent counsel appropriation, and allocated to the OIC.


Appendix III

Statement of Expenditures for Independent Counsel Lancaster Appendix III

RALPH I. LANCASTER





Travel (note 2)





Total expenditures

$228,172

5,836

132,400

29,295

1,247

_34,482

$431,432



Appendix III


Counsel Lancaster

RALPH I. LANCASTER




Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Independent Counsel-Ralph I. Lancaster (OIC-Lancaster) for the 6 months ended March 31, 2001. The statement ofexpenditures includes only expenditures made from the permanent, indefiniteappropriation for the office of independent counsel that are processed throughthe Administrative Office of the U.S. Courts (AOUSC) and the OIC.Mr. Lancaster was appointed on May 26, 1998, to investigate activities of theSecretary of Labor regarding a possible undisclosed financial interest in acompany and the solicitation of illegal campaign contributions. Mr. Lancasterhas submitted his final report (sealed) to the Special Division of the U.S. Court ofAppeals for the District of Columbia. Mr. Lancaster received the order toterminate his office from the U.S. Court of Appeals for the District of Columbiaeffective July 11, 2001.


Note 2 - Travel

Travel generally includes expenditures for investigation-related travel paid forOIC-Lancaster personnel.




Appendix III


Counsel Lancaster


Contractual services represent expenditures for maintenance and repair ofequipment and for services of experts and other specialists in areas of interest tothe investigation.


AOUSC receives an administrative fee equal to 3 percent of OIC expendituresfor performing disbursement and accounting functions for OIC-Lancaster.Payment of these fees generally occurs in the month following the services.Also included in administrative services are other costs, amounting to $23,283,incurred by AOUSC in providing administrative guidance and support toindependent counsel offices. These costs were certified by AOUSC, paid fromthe independent counsel appropriation, and allocated to the OIC.


Appendix IV

Statement of Expenditures for Independent Counsel Pearson Appendix IV

DANIEL S. PEARSON





Travel (note 2)





Total expenditures

$21,021

1,117

27,227

8,331

12

_2,706

$60,414



Appendix IV


Counsel Pearson

DANIEL S. PEARSON




Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Independent Counsel-Daniel S. Pearson (OIC-Pearson) for the 6 months ended March 31, 2001. The statement ofexpenditures includes only expenditures made from the permanent, indefiniteappropriation for the office of independent counsel that are processed throughthe Administrative Office of the U.S. Courts (AOUSC) and the OIC. Mr. Pearsonwas appointed on July 6, 1995, to investigate certain allegations against theSecretary of Commerce. On April 3, 1996, the Secretary was killed in a planecrash. Shortly thereafter, the independent counsel closed the investigation ofthe Secretary and transferred the investigation related to other parties to theDepartment of Justice. Expenditures during this period relate to efforts toarchive the investigative records and to respond to issues related to theinvestigation.


Note 2 - Travel

Travel generally includes expenditures for investigation-related travel paid for adetailee from the Department of Justice.




Appendix IV


Counsel Pearson


Contractual services primarily consist of payments to experts in preparingindependent counsel records for archiving.


AOUSC receives an administrative fee equal to 3 percent of OIC expendituresfor performing disbursement and accounting functions for OIC-Pearson.Payment of these fees generally occurs in the month following the services.Also included in administrative services are other costs, amounting to $1,373,incurred by AOUSC in providing administrative guidance and support toindependent counsel offices. These costs were certified by AOUSC, paid fromthe independent counsel appropriation, and allocated to the OIC.


Appendix V

Statement of Expenditures for Independent Counsel Ray Appendix V

ROBERT W. RAY





Travel (note 2)



Acquisition of capital assets (note 5)

Supplies and materials (note 6)


Total expenditures

$1,929,069

478,627

489,762

925,897

23,920

51,490

_215,182

$4,113,947



Appendix V


Counsel Ray

ROBERT W. RAY




Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Independent Counsel-Robert W. Ray (OIC-Ray) forthe 6 months ended March 31, 2001. The statement of expenditures includesonly expenditures made from the permanent, indefinite appropriation for theoffice of independent counsel that are processed through the AdministrativeOffice of the U.S. Courts (AOUSC) and the OIC.

Kenneth W. Starr (OIC-Starr) was appointed on August 5, 1994, to assume theinvestigation of possible violations of federal criminal law in Re: MadisonGuaranty Savings and Loan Association and other entities, which was begun byregulatory Independent Counsel Robert B. Fiske, Jr. The U.S. Court of Appealssubsequently expanded OIC-Starr's jurisdiction to include selected White HouseTravel Office and access-to-personnel-file issues on March 22, 1996, andJune 21, 1996, respectively. On October 25, 1996, it further expandedOIC-Starr's jurisdiction to include issues related to statements made before theGovernment Reform and Oversight Committee, U.S. House of Representatives,on June 26, 1996. On January 16, 1998, the Court expanded OIC-Starr'sjurisdiction to include issues related to whether, in a civil case, certain individualssuborned perjury, obstructed justice, intimidated witnesses, or otherwise violatedfederal law in dealing with witnesses, potential witnesses, attorneys, or others.

On October 18, 1999, Mr. Starr resigned his appointment, and was succeededby Robert W. Ray as independent counsel effective the same date. OnMarch 16, 2000, Mr. Ray submitted to the Special Division of the U.S. Court ofAppeals for the District of Columbia Circuit two final reports on (1) the access-to-personnel-files issues and (2) the issues related to statements made before theGovernment Reform and Oversight Committee. On July 28, 2000, the Courtordered the public release of the two reports. Further, on June 22, 2000, Mr. Raysubmitted to the Court a final report on the White House travel matter. OnOctober 18, 2000, the Court ordered the public release of that report. OnJanuary 19, 2001, Mr. Ray announced the conclusion of all current mattersbefore the office of independent counsel.


Appendix V


Counsel Ray

On August 21, 2001, the Special Division of the U.S. Court of Appeals for theDistrict of Columbia Circuit, at the request of the independent counsel, orderedthe termination of the investigative functions of the independent counsel as ofSeptember 30, 2001, except to the extent necessary to conclude any remainingnoninvestigative and nonprosecutorial tasks required by statute.


Note 2 - Travel

Travel generally includes expenditures for investigation-related travel paid forOIC-Ray personnel, detailees from other federal agencies, such as the FederalBureau of Investigation (FBI), contractors, and witnesses.




Contractual services primarily consist of expenditures for computer support andmaintenance and investigators and other specialists in areas of interest to theinvestigation.

Note 5 - Acquisition of capital assets

The capital assets expenditures are primarily for automated data processingequipment. These assets will remain the property of the federal government atthe conclusion of the investigation.

Note 6 – Supplies and materials

The supplies and materials expenditures are primarily for office supplies used inthe archiving of records.


Appendix V


Counsel Ray


AOUSC receives an administrative fee equal to 3 percent of OIC expendituresfor performing disbursement and accounting functions for OIC-Ray. Payment ofthese fees generally occurs in the month following the services. Also included inadministrative services are other costs, amounting to $101,884, incurred byAOUSC in providing administrative guidance and support to independentcounsel offices. These costs were certified by AOUSC, paid from theindependent counsel appropriation, and allocated to the OIC.

Note 8 - Other costs (unaudited)

Certain costs relating to employees assigned to work with the OIC by the FBIand the Department of Justice were financed through funds appropriated tothese agencies and, accordingly, are not included in the statement ofexpenditures. These agencies were not reimbursed for these costs. Theschedule below shows the estimated costs (unaudited) of the assistanceprovided to the OIC during the 6-month period, based on information providedby officials of these agencies.

Costs(unaudited)

FBI

Other Justice$206,297

__1,374

$207,671


Appendix VI

Statement of Expenditures for Independent Counsel Smaltz Appendix VI

DONALD C. SMALTZ





Travel (note 2)






Total expenditures

$325,478

25,502

83,682

122,572

5,572

5,161

_41,526

$609,493



Appendix VI


Counsel Smaltz

DONALD C. SMALTZ




Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Independent Counsel-Donald C. Smaltz (OIC-Smaltz) for the 6 months ended March 31, 2001. The statement ofexpenditures includes only expenditures made from the permanent, indefiniteappropriation for the office of independent counsel that are processedthrough the Administrative Office of the U.S. Courts (AOUSC) and the OIC.Mr. Smaltz was appointed on September 9, 1994, to investigate activities of aformer Secretary of Agriculture. Mr. Smaltz submitted his final report to theSpecial Division of the U.S. Court of Appeals for the District of ColumbiaCircuit on January 30, 2001.

Basis of accounting: The accompanying statement of expenditures wasprepared principally on the cash basis of accounting, which is acomprehensive basis of accounting other than U.S. generally acceptedaccounting principles. Under this method, except for personnelcompensation and benefits, expenditures are recorded when the funds aredisbursed by AOUSC or, for noncash transfers, when charged by AOUSC.Most personnel compensation and benefits are recorded at the end of thepay period when earned.

Note 2 - Travel

Travel generally includes expenditures for travel paid for OIC-Smaltzpersonnel.




Contractual services primarily consist of expenditures for services of expertsand other specialists in areas of interest to the investigation.


Appendix VI


Counsel Smaltz


AOUSC receives an administrative fee equal to 3 percent of OICexpenditures for performing disbursement and accounting functions for OIC-Smaltz. Payment of these fees generally occurs in the month following theservices. Also included in administrative services are other costs, amountingto $22,829, incurred by AOUSC in providing administrative guidance andsupport to independent counsel offices. These costs were certified byAOUSC, paid from the independent counsel appropriation, and allocated tothe OIC.

Note 6 - Receipts (unaudited)

As of March 31, 2001, OIC-Smaltz’s convictions and referrals have resultedin the imposition of $11,803,082 in criminal fines, civil penalties, damages,and reimbursement of costs. Approximately $10,905,536 of that amount hasbeen received and deposited into the U.S. Treasury.


Appendix VII

Statement of Expenditures for Special Counsel Danforth Appendix VII

JOHN C. DANFORTH

Office of Special Counsel




Travel (note 2)






Total expenditures

$774,128

27,178

710,608

552,834

852

21,602

__3,114

$2,090,316



Appendix VII

Statement of Expenditures for Special

Counsel Danforth

JOHN C. DANFORTH

Office of Special Counsel



Reporting entity: The accompanying statement of expenditures presents theexpenditures of the Office of Special Counsel-John C. Danforth (OSC-Danforth)for the 6 months ended March 31, 2001. The statement of expendituresincludes only expenditures made from the permanent, indefinite appropriationfor OSC-Danforth that are processed through the Department of Justice. OnSeptember 9, 1999, the Attorney General appointed John C. Danforth as aSpecial Counsel to investigate the government conduct relative to events at theBranch Davidian complex near Waco, Texas, on April 19, 1993. Mr. Danforthsubmitted his final report to the Deputy Attorney General concerning the 1993confrontation at the Branch Davidian complex on November 8, 2000.Mr. Danforth officially closed his office in March 2001.

Basis of accounting: The accompanying statement of expenditures wasprepared principally on the cash basis of accounting, which is a comprehensivebasis of accounting other than U.S. generally accepted accounting principles.Under this method, except for personnel compensation and benefits,expenditures are recorded when the funds are disbursed by the Department ofJustice. Personnel compensation and benefits are recorded at the end of thepay period when earned.

Note 2 - Travel

Travel generally includes expenditures for investigation-related travel forOSC-Danforth personnel and detailees from other components of theDepartment of Justice.


Approximately $240,000 in office rent is included in rent, communications, andutilities. This category also includes rental charges for office furniture.


Contractual services consist primarily of expenditures for litigation support,automated legal research, contract guard services, and other specialists inareas of interest to the investigation.


Appendix VII

Statement of Expenditures for Special

Counsel Danforth


Administrative services represent Department of Justice expenditures forperforming administrative and payroll functions for OSC-Danforth.

Note 6 - Other costs (unaudited)

Certain costs relating to employees assigned to work with OSC-Danforth by theU.S. Postal Service and the Department of Justice were financed through fundsappropriated to these agencies and, accordingly, are not included in thestatement of expenditures. These agencies were not reimbursed for thesecosts. The schedule below shows the estimated costs (unaudited) of theassistance provided to the OSC-Danforth during the 6-month period, based oninformation provided by officials of these agencies.

Costs(unaudited)

Postal Service

Justice

$158,340

_3,963

$162,303

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